TIDMSDX
RNS Number : 2827U
SDX Energy PLC
22 November 2019
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY
SDX TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE MARKET
ABUSE REGULATION (EU) NO. 596/2014 ("MAR"). ON THE PUBLICATION OF
THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE ("RIS"),
THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC
DOMAIN.
22 November 2019
SDX ENERGY PLC
("SDX" or the "Company")
ANNOUNCES ITS FINANCIAL AND OPERATING RESULTS FOR THE THREE AND
NINE MONTHSED 30 SEPTEMBER 2019
SDX Energy Plc (AIM: SDX), the MENA-focused oil and gas company,
announces its financial and operating results for the three and
nine months ended 30 September 2019. All monetary values are
expressed in United States dollars net to the Company unless
otherwise stated.
Summary
Operations
-- Production for the nine months ended 30 September 2019
increased to 3,501 boe/d, net to SDX, compared with 3,455 boe/d for
the same period in 2018. The increase was due to an 18% increase at
Meseda as a result of successful drilling, a 20% increase in
Morocco due to increases in customers and customer consumption
rates, and offset by a 10% decrease at North West Gemsa primarily
as a result of increased water cut across the field as previously
announced.
-- On 7 November 2019, first gas was achieved from the South
Disouq gas field in Egypt (SDX: 55% working interest and operator)
with production increasing ahead of expectations from c.24 MMscfe/d
to c.35 MMscfe/d in the first two weeks of operations.
Egypt
-- At South Disouq, the Company will continue to gradually ramp
up production, targeting a gross plateau production rate of c.50
MMscfe/d in Q1 2020. During 2020, and subject to final partner
discussions, the Company is planning to drill up to three
exploration wells in the South Disouq concession.
-- At Meseda (SDX: 50% working interest, 19.06% entitlement
interest and joint operator), the Company maintains its existing
gross production guidance of 4,000-4,200 bbl/d following successful
drilling of the Rabul-7 and Meseda-19 development wells in the
first nine months of 2019.
-- At North West Gemsa (SDX: 50% working interest and
non-operator), 2019 gross production guidance is maintained at
3,000-3,200 boe/d, with well workovers slowing the rate of natural
field decline.
Morocco
-- On 25 October 2019, the Company announced the start of a
12-well drilling campaign, targeting a mean 15 bcf of gross
unrisked prospective resources, in its operated Gharb Basin acreage
in Morocco (SDX: 75% working interest).
-- The drilling campaign, which is expected to complete in Q1
2020, will target reserves sufficient to satisfy forecast demand
based on existing customers and test new play opening areas of
prospectivity across the portfolio.
-- Morocco gas customers added in late 2018 and early 2019
continue to increase consumption rates. Gross sales gas of 6.6
MMscf/d was achieved in the three months ended 30 September 2019,
with this increasing to 7.0 MMscf/d for the month of October 2019.
As a result, gross gas consumption for the nine months ended 30
September 2019 has increased to 6.2 MMscf/d, underpinning the 2019
sales guidance of an annual average gross rate of 6.0-6.5
MMscf/d.
Financial
-- Net revenues for the nine months ended 30 September 2019 of US$38 million are US$2 million (approximately 5%) lower than in the 2018 comparative period. This reduction in net revenues is due to lower net realised average oil/service fees of US$56/boe, compared to US$64/boe in 2018, which were offset by a small increase in production in the nine months ended 30 September 2019.
-- In the nine months ended 30 September 2019, the Company
achieved a netback of US$27 million, US$4 million lower than the
US$31 million achieved in the 2018 comparative period. This
reduction was due to the US$2 million revenue reduction explained
above and increased opex in the period, resulting from increased
production and workover activity and a greater allocation of costs
to opex in the nine months ended 30 September 2019. In the 2018
comparative period, these costs were allocated to capex and
drilling campaigns in Morocco and North West Gemsa.
-- Operating cash flow before capex in the nine months ended 30
September 2019 remained robust at US$18 million (2018: US$27
million), which was due to the strong netback explained above and
as a result of the continued reduction of Egyptian Petroleum
Company ("EGPC") receivables in the period.
-- Operating cash flow supported US$23 million of capex invested
in the period (2018: US$35 million). Of this US$23 million, US$14
million related to the South Disouq central processing facility
("CPF"), pipeline and well tie-ins and 3D seismic, US$5 million for
drilling, customer connections, and 3D seismic in Morocco, US$2
million for workovers in Meseda and North West Gemsa, and US$2
million for drilling and completion costs at South Ramadan.
-- The Company's forecast drilling and development activities
set out above are fully funded by expected future cash flows and
the Company's existing sources of liquidity.
-- Cash at 30 September 2019 was US$13 million, with the US$10
million European Bank for Reconstruction and Development ("EBRD")
credit facility remaining undrawn.
-- In line with its amortisation schedule, availability under
the EBRD credit facility was reduced to US$7.5 million post-period
end. Discussions are underway with the EBRD to extend the tenor and
re-establish the US$10 million availability under the facility.
--
Mark Reid, CEO of SDX, commented:
"Achieving first gas at South Disouq earlier this month was a
major milestone for SDX and it is anticipated to have a material
impact on the Company's cash generation going forward. Furthermore,
we are pleased with the performance of the wells and the facility
in the first two weeks of operation and this has resulted in a rate
of production increase that has exceeded our expectations.
Notwithstanding this accomplishment, we remain focused on the
delivery of our other two medium-term strategic objectives of
executing an efficient and successful 12-well drilling campaign in
Morocco and progressing our planned exploration drilling campaign
in South Disouq in 2020.
We are also pleased to report that production and capex from our
operations continue to be within our guided ranges and our cashflow
generation, liquidity position, and balance sheet remain strong and
continue to provide us with the necessary funding to pursue these
remaining two medium-term strategic objectives.
With the planned ramp-up of production in South Disouq to 50
MMscfe/d in Q1 2020, together with the drilling campaigns in
Morocco and South Disouq, the remainder of 2019 and 2020 will be a
very busy and exciting period for SDX and we look forward to
providing the market with further updates in due course."
Corporate and financial
-- SDX's key financial metrics for the three and nine months
ended 30 September 2019 and 2018 are:
Three months Nine months ended
ended 30 September
30 September
US$ million, except per unit 2019 2018 2019 2018
amounts
------- ------- --------- ---------
Net revenues 12.5 15.4 38.0 39.8
------- ------- --------- ---------
Netback(1) 9.0 12.0 27.5 31.3
------- ------- --------- ---------
Net realised average oil/service
fees - US$/barrel 54.35 66.38 56.44 63.69
------- ------- --------- ---------
Net realised average Morocco
gas price - US$/mcf 10.38 11.05 10.32 10.52
------- ------- --------- ---------
Netback - US$/boe 28.69 33.62 28.76 33.18
------- ------- --------- ---------
EBITDAX(1) (2) 8.3 11.0 23.4 27.2
------- ------- --------- ---------
Exploration & evaluation expense
("E&E") (0.2) (0.2) (0.8) (5.5)
------- ------- --------- ---------
Depletion, depreciation, and
amortisation ("DD&A") (6.4) (4.7) (18.4) (10.9)
------- ------- --------- ---------
Total comprehensive income/(loss) 0.3 3.2 - 4.1
------- ------- --------- ---------
Net cash generated from operating
activities 5.2 7.0 18.0 27.3
------- ------- --------- ---------
Cash and cash equivalents 12.6 18.7 12.6 18.7
------- ------- --------- ---------
Note:
(1) Refer to the "Non-IFRS Measures" section of this release
below for details of netback and EBITDAX.
(2) EBITDAX for each period presented includes non-cash revenue
relating to the grossing up of Egyptian Corporate Tax on the North
West Gemsa PSC, which is paid by the Egyptian State on behalf of
the Company (Q3 2019: US$0.8 million, Q3 2018: US$1.5 million, nine
months ended 30 September 2019: US$2.7 million, nine months ended
30 September 2018: US$3.7 million)
-- SDX reported a breakeven comprehensive income position for
the nine months ended 30 September 2019 and the main components of
this are:
o US$27.5 million netback;
o US$18.4 million of DD&A;
o US$4.3 million of G&A; and
o US$1.1 million of transaction costs covering the re-domicile
of the Company from Canada to the UK, the Company's capital
reduction to improve our ability to pay dividends, and other
business development activities.
-- Netback of US$27.5 million for the nine months ended 30
September 2019 was down from US$31.3 million for the nine months
ended 30 September 2018. This decrease has mainly been driven by an
11% reduction in realised average oil prices in Egypt to
US$56.44/bbl from US$63.69/bbl, a 10% reduction in North West Gemsa
production, higher opex resulting from increased workover activity
in the nine months ended 30 September 2019, and a greater
allocation of costs to opex in the period. These costs were
allocated to capex and drilling campaigns in Morocco and North West
Gemsa in 2018. These factors were partly offset by increased
production at Meseda and in Morocco.
-- The cash position of US$12.6 million as at 30 September 2019
is US$1.4 million higher than the US$11.2m as at 30 June 2019 and
US$4.7 million lower than the US$17.3 million as at 31 December
2018.
-- The main components of the cash movement for the nine months
ended 30 September 2019 are: operating cash flows of US$19.3
million, which includes a US$1.3 million improvement in working
capital, predominantly the result of a continued reduction in
Egyptian receivables, an Egyptian corporation tax payment of US$1.3
million, and the US$22.8 million capital investment programme
discussed below. The Company's three-year, US$10.0 million credit
facility, established in July 2018 with the EBRD, remains undrawn.
The amount available under this facility was reduced to US$7.5
million post-period end, in line with the facility's amortisation
schedule, and discussions are underway with the EBRD to extend the
tenor and re-establish the US$10.0 million availability under the
facility.
-- US$22.8 million of capital expenditure has been invested into
the business during the nine months ended 30 September 2019. This
comprised:
o US$14.3 million for the South Disouq development, comprising
US$11.5 million for the CPF, pipeline and well tie-ins, and US$2.8
million for the 170km(2) 3D seismic programme;
o US$1.0 million in North West Gemsa for the ongoing well
workover programme;
o US$1.2 million in Meseda for the ongoing pump replacement
programme, well recompletions, and converting a depleted well into
a water injection well
o US$1.8 million in South Ramadan for the SRM-3 well and
development project, the results of which are currently being
assessed; and
o US$4.5 million in Morocco, comprising US$2.3 million for
customer connections, facilities and studies, US$1.8 million for
the current drilling campaign and US$0.4 million relating to the
240km(2) 3D seismic programme in Gharb Centre.
-- Trade and other receivables have been reduced to US$18.5
million as at 30 September 2019, down from US$24.3 million as at 31
December 2018. This reduction is predominantly a result of the
continued recovery of trade receivables, which were due from the
Egyptian State and which were offset against costs owing to
Egyptian State contractors used on the South Disouq development
project.
-- Post-period end, the Company has collected a further US$5.3
million of trade receivables, of which US$4.2 million was collected
from EGPC, and US$1.1 million was collected from third-party gas
customers in Morocco. Out of the US$4.2 million collected from
EGPC, US$2.0 million was in cash and US$2.2 million was offset
against South Disouq development costs and amounts owing to joint
venture partners.
Operational highlights
-- The Company's entitlement share of production from its
operations for the nine months ended 30 September 2019 was 3,501
boe/d (gross - 9,130 boe/d) split as follows:
o North West Gemsa 1,915 boe/d (gross - 3,830 boe/d)
o Meseda 814 bbl/d (gross - 4,271 bbl/d)
o Morocco 772 boe/d (gross - 1,029 boe/d)
Egypt
-- In the South Disouq concession, the Company was awarded a
25-year development lease on 1 July 2019 covering the Ibn Yunus
development area, which together with the 25-year South Disouq
development lease granted on 2 January 2019, comprises the South
Disouq development project. Gas sales agreements with pricing of
US$2.85/Mcf have been signed for both development leases.
-- First gas was achieved from the South Disouq gas field on 7
November 2019. In the two weeks since first gas, production has
increased from c.24 MMscfe/d to c.35 MMscfe/d. The Company will
continue to gradually ramp up production, targeting a gross plateau
production rate of c.50 MMscfe/d in Q1 2020.
-- Completed interpretation of the 170 km(2) 3D seismic survey
acquired in February 2019 and the reprocessed 300 km(2) 3D seismic
data acquired in 2016.
-- During 2020, and subject to final partner discussions, the
Company intends to drill up to three exploration wells in the South
Disouq concession. Two of these wells will be targeting Kafr el
Sheikh and Abu Madi prospectivity that is similar in nature to the
nearby reserves currently being produced through the South Disouq
processing facility. The third well will seek to test a deeper and
larger prospect within the Cretaceous horizon in the block. Success
with this Cretaceous well could open up an exciting new play
fairway for the Company.
-- In Meseda, in the nine months ended 30 September 2019, the
Company successfully completed the Rabul-7 and Meseda-19
development wells with these wells each contributing c.300-400
bbl/d gross to production. In addition, the Company completed
workovers of eight wells with one workover still ongoing. This
workover activity covered pump replacements, recompletions in
different horizons and converting a now depleted well into a water
injector. The above activities were all part of the 2019 budgeted
capital expenditure programme supporting the 2019 annual production
guidance of 4,000-4,200 bbl/d.
-- In North West Gemsa, seven workovers were carried out in the
nine months ended 30 September 2019. The workover activity covered
pump and completion string replacements.
-- At South Ramadan (SDX: 12.75% working interest and
non-operator), the SRM-3 appraisal well was spud on 14 June 2018
and reached a target depth of 15,635 feet. The operator reported
encountering 75 feet of net conventional oil pay in the Matulla
section (primary target), 20 feet of net conventional oil pay in
the Brown Limestone formation, and a further 15 feet of net
conventional oil pay in the Sudr section. The well was completed
and operations continue on the flowline upgrade/replacement so that
the well can be flow-tested. Based on the results of the flow-test,
the Company will decide how best to optimise its position in the
licence.
Morocco
-- The Company's Moroccan acreage (SDX 75% working interest and
operator) consists of five concessions, all of which are located in
the Gharb Basin in northern Morocco: Sebou, Lalla Mimouna Nord,
Gharb Centre, Lalla Mimouna Sud, and Moulay Bouchta Ouest, with the
latter two secured by the Company during H1 2019.
-- In 2018, the Company began selling natural gas to the
following new customers: Peugeot, Extralait, and GPC Kenitra.
During H1 2019, natural gas sales began to three additional
customers: Setexam, Citic Dicastal, and Plastic Omnium.
-- The three new customers added in H1 2019, particularly Citic
Dicastal, have been increasing their consumption rates during Q3
2019 with gross sales gas of 6.6 MMscf/d achieved in the three
months ended 30 September 2019. This consumption increased to 7.0
MMscf/d for the month of October 2019. The increase means that
gross gas sales for the nine months ended 30 September 2019 have
increased to 6.2MMscf/d, a 19% increase from the 2018 rate of
5.2MMscf/d. As such, the Company is maintaining its 2019 sales
guidance of an annual average gross rate of 6.0-6.5 MMscf/d.
-- The Moulay Bouchta Ouest exploration concession has been
awarded to SDX for a period of eight years, with a commitment to
reprocess 150 km of 2D seismic data, acquire 100 km(2) of new 3D
seismic, and drill one exploration well within the first
three-and-a-half-year period.
-- The Lalla Mimouna Sud exploration concession has been
re-awarded to SDX for a period of eight years, with a commitment to
acquire 50 km(2) of 3D seismic and drill one exploration well
within the first three-year period.
-- None of these commitments are expected to require funding in the next 12 months.
2019 production and Capex guidance:
-- The Company's nine months' production to 30 September 2019,
FY19 production guidance, and FY19 capex guidance are shown
below:
Gross production Capex (net to
SDX)
Asset Nine months FY19 Guidance FY19 Guidance
ended 30 September
2019
-------------------- ------------------------- ----------------
NW Gemsa - WI 3,830 boe/d 3,000 - 3,200 boe/d US$2.0 million
50%
-------------------- ------------------------- ----------------
Meseda - WI 50% 4,271 bbl/d 4,000 - 4,200 bbl/d US$2.7 million
-------------------- ------------------------- ----------------
South Disouq N/A First gas achieved, US$19.5 million
- WI 55% 7 November 2019.
Targeting c.50 MMscfe/d
plateau in Q1'20
-------------------- ------------------------- ----------------
Morocco - WI 6.2 MMscf/d 6.0 - 6.5 MMscf/d US$12.0 million
75% 2019 annual average
rate
-------------------- ------------------------- ----------------
-- Capex guidance is unchanged and comprises:
o North West Gemsa: US$4.0 million (US$2.0 million net to SDX)
consisting of up to 10 well workovers and infrastructure
maintenance.
o Meseda: US$5.4 million (US$2.7 million net to SDX) for two
development wells, pump replacements, well workovers, and
facilities upgrades.
o South Disouq: US$35.5 million (US$19.5 million net to SDX). Of
the Company's share, approximately US$17.0 million relates to South
Disouq development activities and US$2.5 million relates to long
lead items and drilling preparations for two of the three potential
exploration wells planned in 2020. To date in 2019, the Company has
offset US$14.7 million of its accounts receivable due from the EGPC
against costs incurred with Egyptian State contractors on the South
Disouq development. The Company expects to use future accounts
receivable offsets amounting to US$2.9 million to fund its
remaining US$2.9 million share of capex to first gas. Post-period
end, each of these figures has reduced to US$1.7 million.
o Morocco: US$14.0 million (US$12.0 million net to SDX). Out of
this US$12.0 million, US$3.4 million relates to long lead items for
the 12 wells and US$6.0 million relates to the drilling costs for
up to four wells expected to be drilled by the end of 2019. The
remaining US$2.6 million relates to the Company's share of
facilities and field maintenance capex.
Corporate
-- SDX remains fully funded for all existing and planned activities.
-- Discussions have begun with the EBRD to extend the tenor and
availability of the US$10 million undrawn credit facility, the
availability of which, as at 31 October 2019, has reduced to US$7.5
million in the line with the existing facility repayment
schedule.
-- The corporate reorganisation was completed in May 2019, with
re-domiciliation from Canada to the UK and delisting from
TSX-V.
-- A capital reduction exercise was completed in June 2019 to
improve the ability to pay dividends in the future when the Company
deems it prudent to do so.
-- As part of the Company's strategy, it continues to review and
explore opportunities to expand the asset base in the North Africa
region, including new licencing rounds and acquisitions.
KEY FINANCIAL & OPERATING HIGHLIGHTS
Unaudited interim condensed consolidated financial statements
with Management's Discussion and Analysis for the three and nine
months ended 30 September 2019 are now available on the Company's
website at www.sdxenergy.com and on SEDAR at www.sedar.com.
Three months ended Nine months ended
Prior Quarter 30 September 30 September
----------------------------------- -------------- --------------------- --------------------
$000s except per unit amounts 2019 2018 2019 2018
----------------------------------- -------------- --------- --------- ---------
FINANCIAL
----------------------------------- -------------- --------- --------- ---------
Gross revenues 16,491 15,952 21,444 49,132 54,331
Royalties (3,759) (3,405) (6,037) (11,172) (14,492)
Net revenues 12,732 12,547 15,407 37,960 39,839
Operating costs (3,589) (3,503) (3,380) (10,466) (8,542)
Netback (1) 9,143 9,044 12,027 27,494 31,297
EBITDAX (1) 7,307 8,316 10,995 23,430 27,203
Total comprehensive (loss)/income (489) 333 3,169 (23) 4,140
Net (loss)/income per share
- basic (0.002) 0.002 0.017 (0.000) 0.020
Cash, end of period 11,195 12,587 18,713 12,587 18,713
Working capital (excluding
cash) 6,409 6,720 14,477 6,720 14,477
Capital expenditures 8,777 4,728 11,017 26,545 35,707
Total assets 140,122 139,542 146,239 139,542 146,239
Shareholders' equity 115,346 115,806 119,848 115,806 119,848
Common shares outstanding
(000's) 204,723 204,723 204,706 204,723 204,706
OPERATIONAL
--------- --------- ---------
NW Gemsa oil sales (bbl/d) 1,326 1,354 1,987 1,421 1,721
Block-H Meseda production
service fee (bbl/d) 818 798 802 814 690
Morocco gas sales (boe/d) 729 827 615 772 645
Other products sales (boe/d) 493 448 485 494 399
----------------------------------- -------------- ---------- --------- --------- ---------
Total sales volumes (boe/d) 3,366 3,427 3,889 3,501 3,455
----------------------------------- -------------- --------- --------- ---------
Realised oil price (US$/bbl) 64.98 57.68 70.76 60.15 67.71
Realised service fee (US$/bbl) 53.56 48.70 55.50 49.95 53.65
----------------------------------- -------------- --------- --------- ---------
Realised oil sales price
and service fees ($/bbl) 60.62 54.35 66.38 56.44 63.69
----------------------------------- -------------- --------- --------- ---------
Realised Morocco gas price
(US$/mcf) 10.31 10.38 11.05 10.32 10.52
Royalties ($/boe) 12.27 10.80 16.88 11.69 15.36
Operating costs ($/boe) 11.72 11.11 9.45 10.95 9.06
Netback ($/boe) (1) 29.84 28.69 33.62 28.76 33.18
----------------------------------- -------------- --------- --------- ---------
(1) Refer to the "Non-IFRS Measures" section of this release
below and the Company's MD&A for the three and nine months
ended 30 September 2019 and 2018 for details of netback and
EBITDAX.
About SDX
SDX is an international oil and gas exploration, production and
development company, headquartered in London, United Kingdom, with
a principal focus on MENA. In Egypt, SDX has a working interest in
three producing assets: a 55% operated interest in the South Disouq
gas field in the Nile Delta and a 50% non-operated interest in each
of the North West Gemsa and Meseda concessions, which are located
onshore in the Eastern Desert, adjacent to the Gulf of Suez. In
Morocco, SDX has a 75% working interest in the Sebou concession,
situated in the Gharb Basin. The producing assets in Morocco are
characterised by exceptionally low operating costs, making them
particularly resilient in a low oil price environment. SDX's
portfolio also includes high impact exploration opportunities in
both Egypt and Morocco.
For further information, please see the Company's website at
www.sdxenergy.com or the Company's filed documents at
www.sedar.com.
Competent Persons Statement
In accordance with the guidelines of the AIM Market of the
London Stock Exchange, the technical information contained in the
announcement has been reviewed and approved by Rob Cook, VP
Subsurface of SDX. Dr. Cook has over 25 years of oil and gas
industry experience and is the qualified person as defined in the
London Stock Exchange's Guidance Note for Mining and Oil and Gas
companies. Dr. Cook holds a BSc in Geochemistry and a PhD in
Sedimentology from the University of Reading, UK. He is a Chartered
Geologist with the Geological Society of London (Geol Soc) and a
Certified Professional Geologist (CPG-11983) with the American
Institute of Professional Geologists (AIPG).
For further information:
SDX Energy Plc
Mark Reid
Chief Executive Officer
Tel: +44 203 219 5640
Stifel Nicolaus Europe Limited (Nominated Adviser and Joint Broker)
Callum Stewart
Nicholas Rhodes
Ashton Clanfield
Tel: +44 (0) 20 7710 7600
Cantor Fitzgerald Europe (Joint Broker)
David Porter
Tel: +44 207 7894 7000
GMP FirstEnergy (Joint Broker)
Jonathan Wright
Tel: +44 207 448 0200
Celicourt (PR)
Mark Antelme/Jimmy Lea/Ollie Mills
Tel: +44 208 434 2754
Glossary
"bbl" stock tank barrel
"boepd" & "boe/d" barrels of oil equivalent per
day
------------------------------
"bopd" & "bbl/d" barrels of oil per day
------------------------------
"Mcf" thousands of cubic feet
------------------------------
"MMscf/d" million standard cubic feet
per day
------------------------------
"MMscfe/d" million standard cubic feet
equivalent per day
------------------------------
Forward-looking information
Certain statements contained in this press release may
constitute "forward-looking information" as such term is used in
applicable Canadian securities laws. Any statements that express or
involve discussions with respect to predictions, expectations,
beliefs, plans, projections, objectives, assumptions or future
events or are not statements of historical fact should be viewed as
forward-looking information. In particular, statements regarding
the Company's intention to increase production at South Disouq, the
expected impact on cash flows, other production targets, future
drilling, pump replacement, field facility upgrades, well
workovers, and the timing and costs thereof, as well as capital
expenditures, operational expenditures, the reduction in Egyptian
receivables, prospective opportunities, business development
activity, and extending the tenor and availability of the US$10
million credit facility with the EBRD should all be regarded as
forward-looking information.
The forward-looking information contained in this document is
based on certain assumptions, and although management considers
these assumptions to be reasonable based on information currently
available to them, undue reliance should not be placed on the
forward-looking information because SDX can give no assurances that
they may prove to be correct. This includes, but is not limited to,
assumptions related to, among other things, commodity prices and
interest and foreign exchange rates; planned synergies, capital
efficiencies and cost-savings; applicable tax laws; future
production rates; receipt of necessary permits; the sufficiency of
budgeted capital expenditures in carrying out planned activities,
and the availability and cost of labour and services.
All timing given in this announcement, unless stated otherwise,
is indicative, and while the Company endeavours to provide accurate
timing to the market, it cautions that, due to the nature of its
operations and reliance on third parties, this is subject to
change, often at little or no notice. If there is a delay or change
to any of the timings indicated in this announcement, the Company
shall update the market without delay.
Forward-looking information is subject to certain risks and
uncertainties (both general and specific) that could cause actual
events or outcomes to differ materially from those anticipated or
implied by such forward-looking statements. Such risks and other
factors include, but are not limited to, political, social, and
other risks inherent in daily operations for the Company, risks
associated with the industries in which the Company operates, such
as: operational risks; delays or changes in plans with respect to
growth projects or capital expenditures; costs and expenses;
health, safety and environmental risks; commodity price, interest
rate and exchange rate fluctuations; environmental risks;
competition; permitting risks; the ability to access sufficient
capital from internal and external sources; and changes in
legislation, including but not limited to tax laws and
environmental regulations. Readers are cautioned that the foregoing
list of risk factors is not exhaustive and are advised to refer to
SDX's Management's Discussion & Analysis for the three and nine
months ended 30 September 2019, which can be found on SDX's SEDAR
profile at www.sedar.com, for a description of additional risks and
uncertainties associated with SDX's business, including its
exploration activities.
The forward-looking information contained in this press release
is as of the date hereof and SDX does not undertake any obligation
to update publicly or to revise any of the included
forward--looking information, except as required by applicable law.
The forward--looking information contained herein is expressly
qualified by this cautionary statement.
Non-IFRS Measures
This news release contains the terms "netback," and "EBITDAX",
which are not recognised measures under IFRS and may not be
comparable to similar measures presented by other issuers. The
Company uses these measures to help evaluate its performance.
Netback is a non-IFRS measure that represents sales net of all
operating expenses and government royalties. Management believes
that netback is a useful supplemental measure to analyse operating
performance and provide an indication of the results generated by
the Company's principal business activities prior to the
consideration of other income and expenses. Management considers
netback an important measure as it demonstrates the Company's
profitability relative to current commodity prices. Netback may not
be comparable to similar measures used by other companies. See
netback reconciliation to operating income/(loss) in the Company's
Interim Consolidated Financial Statements for the three and nine
months ended 30 September 2019 and 2018.
EBITDAX is a non-IFRS measure that represents earnings before
interest, tax, depreciation, amortisation, exploration expense, and
impairment. EBITDAX is calculated by taking operating
income/(loss), adjusted for the add-back of depreciation and
amortisation, exploration expense and impairment of property, plant
and equipment (if applicable). EBITDAX is presented in order for
the users of the financial statements to understand the cash
profitability of the Company, which excludes the impact of costs
attributable to exploration activity, which tend to be one-off in
nature, and the non-cash costs relating to depreciation,
amortisation, and impairments. EBITDAX may not be comparable to
similar measures used by other companies. See EBITDAX
reconciliation to operating income/(loss) in the Company's Interim
Consolidated Financial Statements for the three and nine months
ended 30 September 2019 and 2018.
Oil and Gas Advisory
Estimates of reserves have been made, assuming the development
of each property in which the estimate is made will actually occur,
without regard to the likely availability to the Company of funding
required for the development of such reserves.
Certain disclosures in this news release constitute "anticipated
results" for the purposes of National Instrument 51-101 - Standards
for Oil and Gas Activities of the Canadian Securities
Administrators because the disclosure in question may, in the
opinion of a reasonable person, indicate the potential value or
quantities of resources in respect of the Company's resources or a
portion of its resources. Without limitation, the anticipated
results disclosed in this news release include estimates of volume,
flow rate, production rates, porosity, and pay thickness
attributable to the resources of the Company. Such estimates have
been prepared by Company management and have not been prepared or
reviewed by an independent qualified reserves evaluator or auditor.
Anticipated results are subject to certain risks and uncertainties,
including those described above and various geological, technical,
operational, engineering, commercial, and technical risks. In
addition, the geotechnical analysis and engineering to be conducted
in respect of such resources is not complete. Such risks and
uncertainties may cause the anticipated results disclosed herein to
be inaccurate. Actual results may vary, perhaps materially.
Prospective Resources
The prospective resource estimates disclosed herein have been
prepared by an independent qualified reserves evaluator, ERC
Equipoise Limited, in accordance with the Canadian Oil and Gas
Evaluation Handbook. The prospective resources disclosed herein
have an effective date of 1 January 2019. Prospective resources are
those quantities of gas, estimated as of the given date, to be
potentially recoverable from undiscovered accumulations through
future development projects. As prospective resources, there is no
certainty that any portion of the resources will be discovered. The
chance that an exploration project will result in a discovery is
referred to as the "chance of discovery" as defined by the
management of the Company. There is no certainty that it will be
commercially viable to produce any portion of the resources
discussed herein; though any discovery that is commercially viable
would be tied back to the Company's pipeline in Morocco and then
connected to customers' facilities within 9 to 12 months of
discovery. Based upon the economic analysis undertaken on any
discovery, management has attributed an associated chance of
development of 100%. Anticipated results are subject to certain
risks and uncertainties, including various geological, technical,
operational, engineering, commercial, and technical risks. In
addition, the geotechnical analysis and engineering to be conducted
in respect of such resources is not complete. Such risks and
uncertainties may cause the anticipated results disclosed herein to
be inaccurate. Actual results may vary, perhaps materially.
There are uncertainties associated with the volume estimates of
the prospective resources disclosed herein, due to the level of
information available on prospective resources, but ranges are
defined based on data from the Company's nearby existing analogous
wells. Some of the risks and uncertainties are outlined below:
-- Petrophysical parameters of the sand/reservoir;
-- Fluid composition, especially heavy end hydrocarbons;
-- Accurate estimation of reservoir conditions (pressure and temperature);
-- Reservoir drive mechanism;
-- Potential well deliverability; and
-- The thickness and lateral extent of the reservoir section,
currently based on 3D seismic data.
Use of the term "boe" or the term "MMscf" may be misleading,
particularly if used in isolation. A "boe" conversion ratio of 6
Mcf: 1 bbl and a "Mcf" conversion ratio of 1bbl: 6 Mcf are based on
an energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the
wellhead.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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(END) Dow Jones Newswires
November 22, 2019 02:00 ET (07:00 GMT)
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